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Case of United States vs. Microsoft - Essay Example

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Case of United States vs. Microsoft Date Case of United States vs. Microsoft On May 18, 1998, the United States Department of Justice and 19 States sued Microsoft Corporation for allegedly (i) monopolizing the market for operating systems of personal computers and taking anti-competitive actions to illegally maintain its monopoly; (ii) attempting to monopolize the market for Internet browsers because such browsers would create competition for operating systems; (iii) bundling its browser (Internet Explorer) with Windows; and (iv) engaging in a number of other anti-competitive exclusionary arrangements with computer manufacturers, internet service providers, and…
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Download file to see previous pages The second defense presented by Microsoft was that it was just competing hard against Netscape, and that such competition was welfare-enhancing, and that it did not commit any anti-competitive acts. The third defense given by Microsoft was that it did not have monopoly power in the operating systems market. The fourth defense presented by Microsoft was that competition in the software sector was intense and that its leadership position could be replaced at any time by a new competitor or entrant. Microsoft further argued in its fifth defense, that it is a leader in software innovation and as such intensified and not restrained the innovation process. Lastly, Microsoft reasoned that consumers have benefited from its low pricing of the operating system, the zero pricing of its Internet browser and from its enhancement and acceleration of the innovation process, rather than been harmed by them. Microsoft also argued that consumers benefit from the de facto standardization that its large market share brought to the operating systems market (Economides, 2011). Moreover, Microsoft contended that an anti-trust action against them will dampen incentives for competition and slowdown software innovation. On April 3, 2000, in a two-part decision, Judge Thomas Penfield Jackson ruled in Washington, D.C. that Microsoft's dominance of the personal computer operating systems market constituted a monopoly, and that it used its power against competitors in ways that stifled innovation and harmed consumers. Judge Jackson ordered the breakup of Microsoft into two separate units, one to produce the operating system, and one to produce other software components. This ruling however was overturned by the Court of Appeals on June 28, 2001, acting on the appeal of Microsoft. I think that the DOJ, perceived Microsoft as a bully who would eat their competitors or anybody for that matter, who will be a threat to their market leadership. Microsoft was viewed as a company who would halt innovations if it threatened its Windows monopoly. I view the DOJ’s accusations as trying to control the market process and at the same time belittling the ability of the market to correct itself. In my view, the antitrust case against Microsoft is an attempt by the government to control the industry which might eventually have an adverse effect on future technological advancements in the field. I do not think that it is fair for the DOJ to dictate or interfere what should go to the Windows operating system. Microsoft has every right to offer the web browser for free if it does so to gain dominance in the market and government cannot take that away from them. It is clearly a marketing move on their part. From the defense presented by Microsoft, I can see that the point they are driving at is that they are not a monopoly but rather a market leader. Their claim that their ...Download file to see next pagesRead More
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